Garreth Bloor
South Africa emerged in 1994 from decades of apartheid and centuries of minority-led colonial rule in various guises. For proponents of liberty, excessive state interference in the economy, political uncertainty, corruption and a socialist discourse by populists, underpins opposition to the liberal project of property rights for all, the rule of law and an open, growing economy.
Risks for South Africa’s liberty remain, despite some euphoria around the election of Cyril Ramaphosa as leader of the African National Congress (ANC), the liberation party once led by Nelson Mandela. After five successive victories at the national polls since the end of apartheid in 1994, the party has experienced difficulties under President Jacob Zuma, dragging the country down with it into economic decline. He resigned amidst growing pressure last night, ahead of an expected vote of No Confidence in Parliament scheduled for today, thereby making room for Mr. Ramaphosa to take the role as head of state.
Apartheid’s Legacies
Dial back to 1994. Emerging from apartheid, South Africa needed to establish a growing market that was inclusive: a free economy, one underpinned by a Constitution where the Rule of Law would stand supreme. The democratic process began during negotiations with Nelson Mandela and F.W. De Klerk. Today South Africa stands facing corruption at a grand scale, while threats to property rights loom. Question marks around the Rule of Law and agitation by some to expand the reach of government levers over the economy in the name of the poor are ever-present, in a context of entrenched poverty that millions of South Africans continue to endure.
Apartheid’s variant of national socialism was a grave injustice that is hard to overstate. Segregation governed virtually every aspect of life. Black South Africans were confined to rural reserves (called bantustans) in 13 percent of South Africa, already stripped of all property rights and banned from operating businesses outside these areas. Furthermore, the state took over education and deliberately created a curriculum for black South Africans where anything beyond basic labour skills could not obtained. In the words of the Prime Minister Hendrick Vervoerd it was to ensure blacks would serve as “hewers of wood and drawers of water.”
Apartheid in practice exuded strong elements of crony capitalism within state owned entities and those in the governing elite, a situation conflated, often mischievously, to this date, with genuine open market capitalism. For example, property rights at present are defined by opponents as merely a smokescreen for “white capital” to maintain their “ill-gotten gains” from colonialism and apartheid. Instead, property rights protect the poor. The lack thereof to this day for millions of the previously oppressed is one component that adds to continued exclusion from the economy.
Significant rhetoric against genuine economic liberty has been accompanied by persistent exclusion since apartheid’s demise: many on the far Left present markets as the source of exploitation and poverty, rather than accept that exclusion from the market economy is the core problem. The focus for liberal think tanks and opposition politicians is on building the case for free enterprise and entrepreneurship, within a sound institutional framework, where the marginalized can enter the economy as active participants.
Proposals include the privatization of apartheid-era monoliths such as the electricity monopoly Eskom and South African Airways, with proceeds from the sale going directly to those robbed under the apartheid regime. Besides these anti-competitive, tax-consuming monopolies, much of the land confiscated by the apartheid state remains on the books of the ANC government, inherited at the onset of democracy. These should be returned to the poor under a system of property rights. Educational outcomes in the government system remain far below standard, though low-fee private schools for the poor are emerging with notable successes.
The African National Congress was founded in 1912 and stood firmly in defense of property rights, as voiced when black South Africans were stripped of their property rights under the catastrophic 1913 Land Act. During intensified struggle against apartheid, the Soviet Union became a key backer from the 1950s, moving the once “bourgeois” organization to a tactical alliance with the Soviet bloc. Hard socialist ideals have lived within the ANC for some time among its communist and trade union members in particular. However, increasingly this rhetoric emanates from the Economic Freedom Fighters (EFF). This Marxist-Leninist opposition party won 6.35 percent percent of the vote in the last national elections and has a strong following on several university campuses.
Within the ANC, market-friendly reforms were partially (and often reluctantly) adopted gradually from 1996, but statist fundamentals from the apartheid era were left in place. While macro-economic fundamentals such as existing property rights were secured alongside a greater focus on growth, fundamental reforms were blocked from within the ANC. According to the official opposition, the Democratic Alliance (DA), these include flexibility in collective bargaining, scaled up privatisation of failed apartheid-era state monopolies, and the removal of regulatory burdens on small business.
The DA has its roots in white opposition to apartheid. It has largely been defined as a liberal party in the classical tradition (though it does not always the use the label), espousing the values of non-racialism, an open economy, and the Constitution as its three fundamental first principles. In the face of ANC strength at the federal level for the first decade of democracy, the DA first governed Cape Town through a coalition in 2007 and now rules with a two-thirds majority. As the ANC declines, recording a below 54 percent national average in the 2016 local government elections (it earned over 62 percent in the previous federal elections), the DA now leads new coalition governments: in Johannesburg, the economic hub; in Tshwane (home to the executive capital with downtown Pretoria at the core); and in Nelson Mandela Bay, a seaside city on the southern coast and the largest in the Eastern Cape province.
However, coalitions with the self-styled Marxist Economic Freedom Fighters (EFF) in Johannesburg and Pretoria have seen fascinating results: Herman Mashaba, the self-proclaimed “capitalist crusader,” ascended to mayoral power of South Africa’s economic centre, Johannesburg, with the backing of the EFF in coalition. Mashaba is former chairman of the Free Market Foundation, which played a lead role in negotiations on the inclusion of a property rights clause in the Constitution, and he has mounted significant legal challenges to South Africa’s labour regime, among the most stringent in the world.
Surprising Alliances
Do the coalitions point to the ability to orient radical voices through values-based arguments for liberty, as a pathway to prosperity? Already the EFF has proclaimed loyalty to the Constitution, despite the contradiction between it and their official Marxist positions. Furthermore, it appears amenable to private ownership rights in some form as a way to engage with its supporters. One form this has taken are title deeds to the millions of poor who remain dispossessed on their own land to which they do not have secure tenure, alongside a willingness to consider share-ownership incentives for employers. Both are market-driven measures in opposition to nationalization of land and private industry, as proclaimed in their campaign rhetoric.
According to Frans Cronje of the Institute for Race Relations, South Africans are far more pragmatic than ideological on economic questions. He points out that sentiment towards radical ideas decreases significantly when people’s own personal fortunes are or appear on the up, while noting that a small minority of South Africans actually buy into radical Marxist ideas. To what extent parties reflect this, as opposed to what they proclaim on paper, is an ongoing revelation.
What do these city government coalitions mean for the future of the federal political landscape, bearing in mind both spheres use the same party-political electoral system? The ANC’s fortunes were waning before newly elected Ramaphosa emerged as the party leader. His election to replace an unpopular Zuma may well have stalled the ANC’s decline, for now. Many commentators predicted the ANC would not win next year’s national election outright, had his ex-wife, Nkosazana Dlamini-Zuma, succeeded him as party leader. Opposition coalitions of the nature seen in municipalities have been a rallying call and blueprint for the 2019 federal elections, especially by the DA.
However, since the demise of President Zuma, it is now plausible the EFF may return to the ANC in coalition, under the leadership of Cyril Ramaphosa. Therefore, if a coalition is to be constructed after the next federal election, it is far from likely it would follow the type of coalitions undertaken to bring the DA to power in major cities. The EFF has appeared to have removed itself from responsibility for any actions, policy or otherwise, which the DA-led governments are taking. The prospect then becomes to what extent the ANC can reform internally to enact pro-growth policies, before staring down a 2024 challenge, in the face of continued poverty and recent decline in support at the polls.
It has been said the true test of a democracy is a peaceful change in government, not the first free election. While the business community has welcomed the multi-millionaire ANC party leader’s ascension, pro-business stances may well fall quite far from the pro-market measures that respect the Rule of Law and secure property rights for all. Corporate cronyism and genuine open markets are opposite ends of the spectrum of liberty, yet they are often conflated by some in business as much as by collectivists. Herein lie the risks. Already, Ramaphosa has spoken of land redistribution without compensation, assuring investors and South Africans it will be done in such a way that does not affect the economy negatively. No detail exists on the “how.” But history can give us a pretty good idea.
Moving Forward
Think tanks promoting liberty exist in South Africa and have done a valiant job promoting classical liberal values both during apartheid and present democratic rule. Given continued poverty, showcasing economic freedom as a component of the rule of law and limited government through values-based engagement is needed on the ground. “I can’t eat freedom,” is a retort frequently heard by those between the two worlds of wealth and poverty that define so much of South Africa. The Left is capitalizing on the disappointment many have in their poor material conditions over two decades into what was a promise of prosperity after the dismantling of apartheid.
Success in defending free speech is reflected in South Africa’s vibrant openness. Even perceived attempts to curtail it have been fought with vigor and many remark on the willingness of everyday South Africans to share their political viewpoints. Restrictions on speech hark back to memories of apartheid repression and can serve as a noteworthy inspiration for those defenders of other freedoms.
The poor need property rights to demonstrate their immediate relevance for all, not simply the middle class and wealthy. A strong effort is being waged by several councillors in municipal governments (including a few ANC-run councils) and the Khaya Lam Project of the Free Market Foundation, led by anti-apartheid activist Temba Nolutshungu.
The rule of law is the next area of concern, often in the spotlight regarding corruption. Disregard for the Constitution leaves opposition parties frequently appealing to the judiciary for rectification. Regulations are regularly put in place that take the place of parliamentary legislation, or simply leave the two in conflict, with the latter exercised by Ministerial decree. Individuals and NGOs also turn to the courts in numerous cases for clarity. The judicial system is fortunately resilient, and the Constitutional Court is well-respected.
Present too are the voices decrying onerous legislation that hampers economic freedom, understood in the sense by which it is measured by the Fraser Institute. Federal measures to introduce additional business licensing regulations were shelved few years ago, when entrepreneurs and business chambers vehemently objected to an additional layer of bureaucracy.
However, the nature of lawmaking and not just the laws themselves are a worthwhile consideration in assessing the state of liberty vis-a-vis the rule of law in South Africa.
Rule-making is increasingly made by the executive, as cited above in the case of ministers. The challenge is that the legislation, even when it goes before Parliament, often proposes granting this additional discretionary power to the executive. Legislation is replaced by ill-informed regulations that have not been subject to public inputs. These are the barriers to growth that are more difficult to shelve as there hasn’t been public participation.
No Constitution is perfect, but a discourse that reflects a moral case for the South African Constitution and its provisions for liberty to enable all a life of dignity and of protection from force and fraud is a sound defense against populism. It is a North Star increasingly to which even those critical of its components claim fidelity. In South Africa, the Constitution defends property rights and an independent judiciary, while placing firm limits on the executive, with clear separations of both the three branches of government as well as the three spheres of the local, provincial, and federal governments. In practice, the Constitutional Court regularly upholds these principles, often in cases brought by civil society against the government.
Despite a challenging political climate, there has been some push-back. Citizens appear increasingly tired of corruption and empty promises. Pro-poor rhetoric is finding some traction through sound economics, especially when political coalitions are strategically formed. Out of the rough-and-tumble of coalition politics in major urban centers (where majority of South Africans now live) have arisen outspoken, unashamed advocates of a free society.
It has once been said, economics is to politics what gravity is to jumping. In South Africa, with economic growth sluggish and nowhere near high enough to lift the poor into jobs and upward mobility, the fear of being mugged by reality in the form of further electoral backlash is a strong incentive for the powers that be. This may well temper the temptation to turn the rhetoric of cheap populism into the low road of its implementation.
Garreth Bloor is Vice President for Transatlantic Affairs at the IRR, the oldest classical liberal think tank in South Africa. He served as a former executive politician in the country, is the founder of a venture capital firm and serves as a consultant on policy matters and risk analysis. Bloor currently resides in Toronto.
